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tiedeman
02-04-2006, 07:31 PM
I posted the "Reached the Point" thread about customers paying late and I wasn't going to accept it anymore, but I am curious.

How many people actually follow a strict zero tolerance for late payers, and stop service all together until the invoice is paid in full?

Be honest now, do you actually follow it, or let the customers slid a couple of days. I am just at the point where I am thinking about it doing. Sure, it's usually only about 6 to 8 customers that do it, but I have bills to pay too.

bobbygedd
02-04-2006, 07:40 PM
nobody here has a "zero tolerance" policy. that's a fact. i have, and have had, as close to a "zero tolerance" policy, as a lawnboy can get. this year, however, my new contracts have a true "zero tolerance" policy. i'll let u know how it turns out. as far as my previous very close to "0" tolerance policy, well, fact is, if you enforce it, you lose clients. WHY? cus the rest of the pee on lawnboy community, have no policy whatsoever

tiedeman
02-04-2006, 07:42 PM
nobody here has a "zero tolerance" policy. that's a fact. i have, and have had, as close to a "zero tolerance" policy, as a lawnboy can get. this year, however, my new contracts have a true "zero tolerance" policy. i'll let u know how it turns out. as far as my previous very close to "0" tolerance policy, well, fact is, if you enforce it, you lose clients. WHY? cus the rest of the pee on lawnboy community, have no policy whatsoever

that is my biggest fear. About losing the customers. Is it worth it lose the customers or receive money from them a 1 to 2 weeks later?

I know that they will find someone else out there that lets them slid, but why are we so forgiving compared to other businesses. Like someone stated early about an electrican or plumber. They usually get paid right then and there. Why shouldn't we?

afftandem
02-04-2006, 07:45 PM
Sit down and figure up what % of ur customers are chronic late payers.

If its a high percentage (20+%)... then dont sweat it. Its too much of ur business to disregard... Chaulk it up to human nature (which it is). Just as long as ur eventually getting paid.

Dont figure the guy who pays good, but on the rarest occasion is late (that happens)

If its just a small handful that u could easily replace w/ a little advertising, then get rid of them... U seem to be really worked up over this.

Also, assuming u dont already do this... add in late fees for those who pay late. i.e. a 10% penalty over the monthly cost like other companys.. may want to check if there are any laws on how much u can charge as a late fee.

Your Bill: $100
If paid after the 1st: $110

Maybe that'll help.

bobbygedd
02-04-2006, 07:47 PM
LOOK, fact is fact, i said it a million times, - LAWNBOYS ARE NOT BUSINESSMEN!" cutting grass, and EXTENDING CREDIT, are 2 different types of businesses. one, is in business to cut grass, for a fee, and the other, is in business, to extend credit, for a fee. HOW CAN both, be one in the same? you'll lose business tied, becuase most lawnbvoys are willing to work for less than minimum wage. in fact, most lawnboys, LIKE MOST LOWER CLASS folk, are just plain UNEMPLOYABLE, and take to the mower, just to eat.

out4now
02-04-2006, 07:50 PM
that is my biggest fear. About losing the customers. Is it worth it lose the customers or receive money from them a 1 to 2 weeks later?

I know that they will find someone else out there that lets them slid, but why are we so forgiving compared to other businesses. Like someone stated early about an electrican or plumber. They usually get paid right then and there. Why shouldn't we?

Well you sort of answered your own question there. Its because like you and Mr. Gedd pointed out there's an endless supply out there willing to let them slide so its really a trade off. If you end it, you have to spend more time and money looking for new work so does the cost of that really offset the cost of keeping them if they pay a few days late? Unification in this industry will never happen, so it makes it difficult to get any leverage. If you're at the point of turning away work then a few customers is not a big deal but if you really need them then it will hurt more. How long do you think they's wait on their paychecks at work though. Start tacking on late fees like returned check fees and see if they pay it while you're out shopping for new clients.

Lux Lawn
02-04-2006, 07:54 PM
nobody here has a "zero tolerance" policy. that's a fact. i have, and have had, as close to a "zero tolerance" policy, as a lawnboy can get. this year, however, my new contracts have a true "zero tolerance" policy. i'll let u know how it turns out. as far as my previous very close to "0" tolerance policy, well, fact is, if you enforce it, you lose clients. WHY? cus the rest of the pee on lawnboy community, have no policy whatsoever

I agree you will lose customers.I have some that I let slide and I know that I shouldn't but they are the accounts you don't want to lose.The people that are always late you charge them your late fee every month,if they drop you who cares.

tiedeman
02-04-2006, 07:54 PM
Well you sort of answered your own question there. Its because like you and Mr. Gedd pointed out there's an endless supply out there willing to let them slide so its really a trade off. If you end it, you have to spend more time and money looking for new work so does the cost of that really offset the cost of keeping them if they pay a few days late? Unification in this industry will never happen, so it makes it difficult to get any leverage. If you're at the point of turning away work then a few customers is not a big deal but if you really need them then it will hurt more. How long do you think they's wait on their paychecks at work though. Start tacking on late fees like returned check fees and see if they pay it while you're out shopping for new clients.

the whole situation with late fees of what I have run across is this: You charge them a late fee, but when they pay the bill they leave the late fee off of the payment. They feel that they should not have to pay it. So what happens when they don't pay the late fee? What do you do then?

It just seems like it is an endless circle where the customer always wins, whether you are charging them a late fee and they don't pay it or they pay their bills late

tiedeman
02-04-2006, 07:58 PM
I agree you will lose customers.I have some that I let slide and I know that I shouldn't but they are the accounts you don't want to lose.The people that are always late you charge them your late fee every month,if they drop you who cares.

But my question is Larry, shouldn't we care, shouldn't we start to really tighten up he chain on these customers?

To me it seems that the customers took advantage of me. It's kind of a no win situation. The only way that I could win is by really dropping the customer, or stopping service until paid in full, and finding a customer that will pay on time

Another thing to think about, what happens if you stop service. Then they pay, and you have an overgrown lawn. Sure the contract might say that the charge them is perhaps double because of the over growth, but do you really think that the customer will pay double the charge for just one cutting?

bobbygedd
02-04-2006, 07:58 PM
it's a LATE FEE. not a LATE OPTION. if u recieve the check, without the late fee, then you should treat it as an unpaid account. afterall, it wasnt paid in full, if the late fee wasn't paid. then, your suspension/collection policy should kick in. it's all a matter of having policies, and sticking to them

out4now
02-04-2006, 07:58 PM
the whole situation with late fees of what I have run across is this: You charge them a late fee, but when they pay the bill they leave the late fee off of the payment. They feel that they should not have to pay it. So what happens when they don't pay the late fee? What do you do then?

It just seems like it is an endless circle where the customer always wins, whether you are charging them a late fee and they don't pay it or they pay their bills late

Well if you tried it and they are being a PITA its bye bye time. You going to feed yourself with their promises? If that is what you're running into then by all means eject those losers and let the kid down the block wait for his money, you need yours. BG posted just before I did there so I have to agree with exactly what he said about policy.

tiedeman
02-04-2006, 08:01 PM
Well if you tried it and they are being a PITA its bye bye time. You going to feed yourself with their promises? If that is what you're running into then by all means eject those losers and let the kid down the block wait for his money, you need yours.

Then it comes back down to, is it worth it to drop that customer over a late fee? Do you really want to drop a customer over a $10 late fee, when their invoice is around $500 a month. Sure, I know that I have done it. I have looked the other way when someone doesn't pay the late fee, why do I want to lose the account.

See what I mean, it just seems sometimes like a lost cause. But, why should I have to suffer either way?

sheshovel
02-04-2006, 08:01 PM
Hey I just up and forgot to pay my car insurance last month..had someone in the hospital and by the time I got home and realized I missed paying it it was three days late..Have been with the same company for years always paid and paid on time.
You think they gave me any grace period?Heck no I will have to pay for my mind being on something more important like a life or death situation than on payind a bill.No grace period ,no leway ,no excuse..three days or thirty days is all the same to them.I will look for a new insurance company as soon as I possibly can because this pissed me off.

tiedeman
02-04-2006, 08:03 PM
Hey I just up and forgot to pay my car insurance last month..had someone in the hospital and by the time I got home and realized I missed paying it it was three days late..Have been with the same company for years always paid and paid on time.
You think they gave me any grace period?Heck no I will have to pay for my mind being on something more important like a life or death situation than on payind a bill.No grace period ,no leway ,no excuse..three days or thirty days is all the same to them.I will look for a new insurance company as soon as I possibly can because this pissed me off.

You made a perfect point. If you allow customers no grace period, they will find someone else, just like you are looking for someone else for insurance right now because they did not offer you a grace period

Lux Lawn
02-04-2006, 08:03 PM
But my question is Larry, shouldn't we care, shouldn't we start to really tighten up he chain on these customers?

To me it seems that the customers took advantage of me. It's kind of a no win situation. The only way that I could win is by really dropping the customer, or stopping service until paid in full, and finding a customer that will pay on time

Another thing to think about, what happens if you stop service. Then they pay, and you have an overgrown lawn. Sure the contract might say that the charge them is perhaps double because of the over growth, but do you really think that the customer will pay double the charge for just one cutting?

It almost seems like a lose/lose situation.I know what you mean and YES things do need to be tightened up.A lot of times once you stop service then they are not going to pay anyways.If the do getting them to pay double for a double cut is almost impossible.The other thing is if you try getting them to pay in advance the think its a slap in the face.

tiedeman
02-04-2006, 08:06 PM
It almost seems like a lose/lose situation.I know what you mean and YES things do need to be tightened up.A lot of times once you stop service then they are not going to pay anyways.If the do getting them to pay double for a double cut is almost impossible.The other thing is if you try getting them to pay in advance the think its a slap in the face.

That is another thing I have thought about, or at least along the lines of credit cards. DFW does the whole credit card thing, and he says in his previous posts that it works and weeds out the good from the bad. But how many customers will I scare away by telling them, "Sorry, I am not a credit agency, you must put down a credit card, and after each time of service, it is billed to your card."

That is one of the really extreme things I have been thinking about doing

Lux Lawn
02-04-2006, 08:06 PM
Sheshovel,
I understand what you are saying but I give a grace period on my invoice's.I think you need to give a few days.You get it for your house & car.

bobbygedd
02-04-2006, 08:07 PM
this is why you need to keep overhead low, as low as possible. with little overhead, you can operate on YOUR TERMS. if the bills are high though, and the competition is fierce, then, the client has you by the gonads. i aint livin like that.

tiedeman
02-04-2006, 08:09 PM
Sheshovel,
I understand what you are saying but I give a grace period on my invoice's.I think you need to give a few days.You get it for your house & car.

I am not saying that I do not allow some customers grace period or like 2 to 3 days, because I look at it this way, it should only take 2 days of mailing for the payment to reach me even if they paid on the due date.

But like I stated in my other post; we are giving customers a lot of credit freedom. When I send out an invoice, it basically has 4 cuts on it, now by the time that invoice is due, I would have done 3 more cuts on the customers property, that is 7 cuts total. What happens if they pay late, then they could be getting 8, 9, 10 cuts on credit. To me, that just seems like a heck of a chance to be sticking your neck out there like that

Lux Lawn
02-04-2006, 08:10 PM
Some people may find it easier to pay with a credit card because they charge everything...others you couldn't pry it out of there wallet with a crow bar.I have had people try to pay me with them in the past and were surprised that I didn't take them.

tiedeman
02-04-2006, 08:11 PM
see, I accept credit cards, but should I be basicall absorbing the cost of the credit card fees just for I am getting paid on it?

mtdman
02-04-2006, 08:11 PM
If you are afraid of losing customers you aren't running a business, you're working for them. If you are running a business you set the terms of the business agreement and they stick to it. If they bail, your business continues by adding new clients. Once you are afraid of losing customers, they have you by the balls and they set the terms.

I don't have a zero tolerance policy, but I do drop clients for not paying. I've gotten better over the years of nipping that stuff in the bud, but I have dropped a couple people in the last few years because of late paying. One guy begged me to keep working for him last fall after not paying for 2 months, but I told him his lack of payment was disrespectful to me and showed me he didn't take my service seriously. I don't work for people like that when so many people are willing to pay on time.

If you're running a business, run it. Don't let the clients run it for you.

BENTLEY'S
02-04-2006, 08:14 PM
It's simple. Everyone has a problem paying on time all time. Sooner or later something comes up. Use the 3 strike rule, after the third time they have to pay one month in advance to resume service. You must tell the customer at the beginning of the season and remind them after the second strike. It works! If your work is good enough you won't lose your customer.

Bentley's

Lux Lawn
02-04-2006, 08:18 PM
see, I accept credit cards, but should I be basicall absorbing the cost of the credit card fees just for I am getting paid on it?

No probably not,maybe you should build it into your pricing if you can.One price for cash/check and one for CC, I know its not the best but some guys do it.Also if you buy something in a store with a CC they pay the fee.Maybe its just an added cost of doing business.I'm not reaally sure.

mtdman
02-04-2006, 08:19 PM
You cannot by law charge more for cc transactions. Build it into your pricing for everyone.

Lux Lawn
02-04-2006, 08:24 PM
You cannot by law charge more for cc transactions. Build it into your pricing for everyone.
I wasn't really sure.

afftandem
02-04-2006, 08:26 PM
You cannot by law charge more for cc transactions. Build it into your pricing for everyone.


You dont charge more for cc customers....
i.e. you charge $30 for a lawn, but your customers that pay cash pay $27.
you give a cash discount...

Many, Many, Many gas stations do this for paying for gas.

tiedeman
02-04-2006, 08:46 PM
You cannot by law charge more for cc transactions. Build it into your pricing for everyone.

yup, I do know that. I checked into that before.

I can't believe the amount of people that try to do it too

tiedeman
02-04-2006, 08:48 PM
so it goes back to some options then I guess:

1. Go forget about it, and keep on letting them pay late because you are afraid to lose them

2. Charge a late fee, even if they might not pay it

3. Make them pay in advance

4. Make them do payment with a credit card once a month or after each service

5. Stop service until payment is received in full

6. Drop them as a customer

SoloMow
02-04-2006, 09:15 PM
I learned about late payments and zero tolerance two years ago when a customer was late with a monthly payment. I sent her a "reminder" and received a message on my answering system that "the check was in the mail." :nono: So........... I made the mistake of trusting her word and serviced the property again. Nothing arrived in the mail, then....ever.....or since. I learned my lesson. She was my only deadbeat the entire year. Stupid is as stupid does. :p

tiedeman
02-04-2006, 09:18 PM
I learned about late payments and zero tolerance two years ago when a customer was late with a monthly payment. I sent her a "reminder" and received a message on my answering system that "the check was in the mail." :nono: So........... I made the mistake of trusting her word and serviced the property again. Nothing arrived in the mail, then....ever.....or since. I learned my lesson. She was my only deadbeat the entire year. Stupid is as stupid does. :p

so what is your overall feeling then on a zero tolerance?

dkeisala
02-04-2006, 09:20 PM
LOOK, fact is fact, i said it a million times, - LAWNBOYS ARE NOT BUSINESSMEN!" cutting grass, and EXTENDING CREDIT, are 2 different types of businesses. one, is in business to cut grass, for a fee, and the other, is in business, to extend credit, for a fee. HOW CAN both, be one in the same? you'll lose business tied, becuase most lawnbvoys are willing to work for less than minimum wage. in fact, most lawnboys, LIKE MOST LOWER CLASS folk, are just plain UNEMPLOYABLE, and take to the mower, just to eat.
I get what you are saying bobby and can't say I totally disagree with you but I utilize service trades just like everyone else. I just had a roof put on my house a few months ago. The company I used gave me an estimate something like 6 months prior to me calling and scheduling the job. They come out, rip off the roof, put a new one on and I get a bill in the mail a few days later for $5,000. They could have demanded payment at the time of service and I was prepared to pay right then and there but they didn't request it. Shortly thereafter, I had new gutters installed. Again, the estimate was a few months old before I called to schedule the job. They come out, slap gutters on my house and again, nobody asked for payment the day the gutters were installed. I get a bill in the mail a few days later for $600.

My point here is that sometimes things are simply common industry practices. That's not to say that you shouldn't have a zero tolerance policy for those that take advantage of you but there are a lot of people in the trades that bill for their services after they have been performed. Everyone is taking their chances and sure, you're gonna have a bad apple here and there but isn't this part of that whole "cost of doing business" thing?

tiedeman
02-04-2006, 09:28 PM
would customers be more turned off with you demanding a credit card up front compared to billing later?

I mean, if I had it my way, I would bill every customer once a month

SoloMow
02-04-2006, 09:31 PM
so what is your overall feeling then on a zero tolerance?


I simply forget to drop by their residence until the late payment arrives. It seems to have worked for me. Last year one customer called me and said, "Did you forget to mow my lawn this week?" I responded with, "No, did you get my late payment reminder in the mail?" She paused, stuttered a bit, and told me that my payment would be in an envelope on the back door the next day. It was and I continued service. So, I suppose, I do have a zero tolerance policy. :drinkup:

tiedeman
02-04-2006, 09:42 PM
ok, so you are saying then to just stop service until paid in full Solomow?

I will throw out another example to guys to think about and what would you guys do. Let's say you have a customer, in which you maintain both his business and his residential house. His business pays on time, but he is always 2 to 3 weeks behind on paying for his house.

Would you stop servicing his residential house until paid in full, even though his business pays on it, and if you stop service there is a chance that you would lose both properties???

SoloMow
02-04-2006, 09:46 PM
ok, so you are saying then to just stop service until paid in full Solomow?

I will throw out another example to guys to think about and what would you guys do. Let's say you have a customer, in which you maintain both his business and his residential house. His business pays on time, but he is always 2 to 3 weeks behind.

Would you stop servicing his residential house until paid in full, even though his business pays on it, and if you stop service there is a chance that you would lose both properties???

I'm strictly residential so I can't comment about your particular situation. I guess life always comes down to how much BS one is willing to endure.

Littleriver1
02-04-2006, 09:51 PM
I think if the truth were known, all of you would be surprised at how many businesses are carrying large anounts of credit by a very large number of clients. Most companys control it in Percentages and raise their prices to make up for the lose. Which means you and I pay for their lose every time we buy something. The number of dollars you all are talking about is so small and insignifant that no one cares about you. The problem is, if this is a problem for you, then you are living off your cash flow and do not have a real net worth. Will you ever get to the point that you can forgive debt and give that person safe passage through your mind? It's a fact of life and a part of business. You should try to collect your money but there are going to be times you will not. Those of you that get paid late should be happier than those that don't get paid at all. Wouldn't it be nice if we all got all our money all the time on time?

dkeisala
02-04-2006, 10:11 PM
would customers be more turned off with you demanding a credit card up front compared to billing later?

I mean, if I had it my way, I would bill every customer once a month
Depends on how you put it. A credit card ensures you're getting paid. With monthly billing, you assume more risk. Price = X wth a credit card guarantee but it's X+Y% w/o because you are assuming more risk.

kmann
02-04-2006, 10:16 PM
this is why you need to keep overhead low, as low as possible. with little overhead, you can operate on YOUR TERMS. if the bills are high though, and the competition is fierce, then, the client has you by the gonads. i aint livin like that.

This is 100% correct. If they don't comply, dump em'. If you over extend yourself, you'll have to abide by their terms.

tiedeman
02-04-2006, 10:20 PM
what about this guys? What do you think? This goes out on Monday


Dear Customer,
Starting February 13th, 2006, we are adopting a zero tolerance for late payments for all customers. We have been very lenient in the past with late payers, but lately many people are abusing our type of credit based billing system.

If the account is past due, all services are suspended until paid in full and Tiedeman, LLC waives all damages and/or injuries that may occur from the suspend service.

Once the outstanding account is paid in full, should additional work beyond the normally scheduled services be required due to the late payment (such as extreme amounts of lawn growth and/or excessive accumulation of snow) we will charge an additional hourly rate of $50 per hour in order to properly restore the account to regular standards.

To help with quicker payments we will start to enclose payment envelopes with all invoices. We also want to remind customers that we do accept credit card payments.

If you have any questions, please feel free to contact me. Thank you very much.

Troy Tiedeman
Tiedeman,LLC

dcondon
02-04-2006, 10:45 PM
It will run you out of business in this area if you don't have enough accounts to offset the difference. Looks like lots of work coming this way!!!payup

HOOLIE
02-04-2006, 11:04 PM
Troy I think I would leave out the "zero tolerance" wording and phrase it differently.

I'm pushing the CC's this season, I will be offering a lower price to new clients if they pay this way...that's how I want to be paid...let Visa and MC assume the risk of not getting paid, that's what they do day-in and day-out.

I'm pushing it for the old customers too, but just offering it as an option.

I'll process the CC's monthly, not after each cut.

tiedeman
02-04-2006, 11:28 PM
It will run you out of business in this area if you don't have enough accounts to offset the difference. Looks like lots of work coming this way!!!payup

fine with me, it will weed out the bad customers. If the competition wants the bad customers, they can have them. I am moving out of the area anyways within the next year to two years.

I would rather have customers that pay on time

Precision
02-04-2006, 11:50 PM
They feel that they should not have to pay it. So what happens when they don't pay the late fee? What do you do then?


suspend service until paid in full.
if it happens again, drop them like the bad habit that they are.

tiedeman
02-04-2006, 11:50 PM
I think if the truth were known, all of you would be surprised at how many businesses are carrying large anounts of credit by a very large number of clients. Most companys control it in Percentages and raise their prices to make up for the lose. Which means you and I pay for their lose every time we buy something. The number of dollars you all are talking about is so small and insignifant that no one cares about you. The problem is, if this is a problem for you, then you are living off your cash flow and do not have a real net worth. Will you ever get to the point that you can forgive debt and give that person safe passage through your mind? It's a fact of life and a part of business. You should try to collect your money but there are going to be times you will not. Those of you that get paid late should be happier than those that don't get paid at all. Wouldn't it be nice if we all got all our money all the time on time?

but shouldn't we get the money on time. I mean, we provide really a luxury for customers. If they can not afford the luxury, then why bother?

tiedeman
02-04-2006, 11:51 PM
suspend service until paid in full.
if it happens again, drop them like the bad habit that they are.

so, do you think that in the long run, and also short run that you should think more about getting paid by the due date, or getting paid no matter, just as long as you get paid

HOOLIE
02-05-2006, 12:02 AM
but shouldn't we get the money on time. I mean, we provide really a luxury for customers. If they can not afford the luxury, then why bother?

Very true, but wealth doesn't necessarily make someone pay their bills on time. I just think how all my elderly customers seem to pay the bill immediately, and I know none of them are flush with cash.

That's why I'm pushing the CC's this season, I want to remove the customer from the actual bill-paying process.

Precision
02-05-2006, 12:06 AM
what about this guys? What do you think? This goes out on Monday


Dear Customer,
Starting February 13th, 2006, we are adopting a zero tolerance for late payments for all customers. We have been very lenient in the past with late payers, but lately many people are abusing our type of credit based billing system.

If the account is past due, all services are suspended until paid in full and Tiedeman, LLC waives all damages and/or injuries that may occur from the suspend service.

Once the outstanding account is paid in full, should additional work beyond the normally scheduled services be required due to the late payment (such as extreme amounts of lawn growth and/or excessive accumulation of snow) we will charge an additional hourly rate of $50 per hour in order to properly restore the account to regular standards.

To help with quicker payments we will start to enclose payment envelopes with all invoices. We also want to remind customers that we do accept credit card payments.

If you have any questions, please feel free to contact me. Thank you very much.

Troy Tiedeman
Tiedeman,LLC

How about

Dear Customer,

Starting February 13th, 2006, we are forced to tighten our policy regarding late payments on maintenance accounts. We have been very lenient in the past with late payments, but a few people last year really took advantage of my leniency.

In the future, if the account is more than 7 days past due, all services are suspended until payment is received in full. Tiedeman, LLC reserves the right to charge for any and all missed mowings upon resumption of scheduled service.

For your convenience, we are now enclosing self addressed stamped envelopes with all invoices.

For those who would prefer to use credit cards, we also accept credit card payments.

If you have any questions, please feel free to call me.

Sincerely

Troy Tiedeman
Tiedeman,LLC

tiedeman
02-05-2006, 12:06 AM
Very true, but wealth doesn't necessarily make someone pay their bills on time. I just think how all my elderly customers seem to pay the bill immediately, and I know none of them are flush with cash.

That's why I'm pushing the CC's this season, I want to remove the customer from the actual bill-paying process.

Now when you say the credit bill process, are you billing the customers a flat rate each month without notification of the transaction, or do you notify the customer first of the bill, then charge it.

I mean, could you perhaps bill the customer, and on the invoice is basically says, "This invoice will be billed to your credit card within 10 days. If you contest the amount of the invoice please contact us before the 10 days is up"

tiedeman
02-05-2006, 12:09 AM
How about

Dear Customer,

Starting February 13th, 2006, we are forced to tighten our policy regarding late payments on maintenance accounts. We have been very lenient in the past with late payments, but a few people last year really took advantage of my leniency.

In the future, if the account is more than 7 days past due, all services are suspended until payment is received in full. Tiedeman, LLC reserves the right to charge for any and all missed mowings upon resumption of scheduled service.

For your convenience, we are now enclosing self addressed stamped envelopes with all invoices.

For those who would prefer to use credit cards, we also accept credit card payments.

If you have any questions, please feel free to call me.

Sincerely

Troy Tiedeman
Tiedeman,LLC

I like it, but do you feel that the 7 days is a little too much. What about 2 or 3 days?

jims5964
02-05-2006, 12:10 AM
I don't really enforce my late fee policy I have it for customers that try to cancel without paying their final bill. I have a warning on every invoice that there will be a $25 charge for all payments received 30 days after the due date and every 30 days there after.
I am not going to stop service for one of my customers that has been with me for several years because they are past due.

Jim
www.bestmowingcompany.com

tiedeman
02-05-2006, 12:12 AM
I don't really enforce my late fee policy I have it for customers that try to cancel without paying their final bill. I have a warning on every invoice that there will be a $25 charge for all payments received 30 days after the due date and every 30 days there after.
I am not going to stop service for one of my customers that has been with me for several years because they are past due.

Jim
www.bestmowingcompany.com

my question to you then Jim, why do you do that? Don't you feel tha the customer is taking advantage of you?

I am just curious. I mean, I too have done that in the past as well, and I too have the late fee thing on my invoice, but it just seems that everybody ignores it, or I don't use it, or when I do use it they still won't pay the fee.

jims5964
02-05-2006, 12:22 AM
I consider it a tool to use when needed, for example 2 years ago a customer canceled and he owed me $140 for the last month of mowing. He did not pay until 6 months later but during that 6 months I continued to send him a new invoice with the late fee added. When he did pay, he paid the $140 for mowing and the $150 for late fees.

This is the most that I ever got in late fees from one customer but it was the easiest money I ever made.

tiedeman
02-05-2006, 12:26 AM
I consider it a tool to use when needed, for example 2 years ago a customer canceled and he owed me $140 for the last month of mowing. He did not pay until 6 months later but during that 6 months I continued to send him a new invoice with the late fee added. When he did pay, he paid the $140 for mowing and the $150 for late fees.

This is the most that I ever got in late fees from one customer but it was the easiest money I ever made.

But to me it really seems that it did not work. He didn't pay for 6 months and racked up that much in fees...to me the late fees didn't work

jims5964
02-05-2006, 12:32 AM
I guess I don't understand why you don't think that it worked.
I collected for the work that I did plus an extra $150 in late fees.

tiedeman
02-05-2006, 12:35 AM
I guess I don't understand why you don't think that it worked.
I collected for the work that I did plus an extra $150 in late fees.

true, it worked with the late fee, but I mean that it didn't work with him paying you any sooner. Do you see what I mean?

jims5964
02-05-2006, 12:40 AM
Yes it didn't motivate him to pay any sooner but I was compensated for waiting.
I don't know how many customers pay their bill on time because of the possible late charge. I like to think that the late charge is a little reminder to pay the mowing guy.

HOOLIE
02-05-2006, 12:53 AM
Now when you say the credit bill process, are you billing the customers a flat rate each month without notification of the transaction, or do you notify the customer first of the bill, then charge it.

I mean, could you perhaps bill the customer, and on the invoice is basically says, "This invoice will be billed to your credit card within 10 days. If you contest the amount of the invoice please contact us before the 10 days is up"

Most of my customers are paying per cut, I do have a couple on a flat rate plan and a few that prepay for the year.

Yeah I'm planning to do like you said, give them a little time to see the charges before I actually process it. I'd like to just email the statement as most of them probably don't need a paper bill, but need to check how to do that.

To further complicate things :p I'm planning on running 2 billing cycles to maintain a better cashflow. One cycle would be a full calendar month, and the other would run from the 16th of the month thru the 15th of the following month. Still not 100% sure I'll be doing that but I'm definitely leaning toward it.

Brianslawn
02-05-2006, 12:59 AM
that is my biggest fear. About losing the customers. Is it worth it lose the customers or receive money from them a 1 to 2 weeks later?

I know that they will find someone else out there that lets them slid, but why are we so forgiving compared to other businesses. Like someone stated early about an electrican or plumber. They usually get paid right then and there. Why shouldn't we?


because most lawnboys are desperate and have failed at everything else they tried. maybe not the ones on here, but your average lawnboy named joe. being a lawnboy is their absolute last opportunity to make a buck, so they suck the customers ****, and be their slave. there is way too much competition in the unconsolidated lawn market, so the customers have the advantage in every possible way. to all the desperate lawnboys out there... vaselein is on sale at walmart.

tiedeman
02-05-2006, 01:03 AM
Most of my customers are paying per cut, I do have a couple on a flat rate plan and a few that prepay for the year.

Yeah I'm planning to do like you said, give them a little time to see the charges before I actually process it. I'd like to just email the statement as most of them probably don't need a paper bill, but need to check how to do that.

To further complicate things :p I'm planning on running 2 billing cycles to maintain a better cashflow. One cycle would be a full calendar month, and the other would run from the 16th of the month thru the 15th of the following month. Still not 100% sure I'll be doing that but I'm definitely leaning toward it.

Explain those billing cycles that you plan on using in more detail

HOOLIE
02-05-2006, 01:47 AM
I'm just going to split the client base roughly half and half between the 2 cycles. So they still get billed once a month, just at different times. I use Gopher and never really delved into it much until lately, I see it's very easy to set it up that way.

Especially to start up the season, it'll help as far as getting some money in sooner. Downside is I'll be doing bills twice a month, but only half the normal number of bills, so it might actually be more pleasant to do the billing. Maybe :p

My main concerns this offseason have been ways to improve cash flow, reduce accounts receivable and of course the quest for a dependable employee...

Brianslawn
02-05-2006, 02:01 AM
I'm just going to split the client base roughly half and half between the 2 cycles. So they still get billed once a month, just at different times. I use Gopher and never really delved into it much until lately, I see it's very easy to set it up that way.

Especially to start up the season, it'll help as far as getting some money in sooner. Downside is I'll be doing bills twice a month, but only half the normal number of bills, so it might actually be more pleasant to do the billing. Maybe :p

My main concerns this offseason have been ways to improve cash flow, reduce accounts receivable and of course the quest for a dependable employee...


i got your answers. credit cards and mexicans!

tiedeman
02-05-2006, 02:06 AM
I'm just going to split the client base roughly half and half between the 2 cycles. So they still get billed once a month, just at different times. I use Gopher and never really delved into it much until lately, I see it's very easy to set it up that way.

Especially to start up the season, it'll help as far as getting some money in sooner. Downside is I'll be doing bills twice a month, but only half the normal number of bills, so it might actually be more pleasant to do the billing. Maybe :p

My main concerns this offseason have been ways to improve cash flow, reduce accounts receivable and of course the quest for a dependable employee...

perhaps I should try a two cycle billing. Have all of my flat rate customers pay during one period, while the other customers pay during a different period.

HOOLIE
02-05-2006, 02:12 AM
i got your answers. credit cards and mexicans!

Here it's more like credit cards and Salvadorans. Just need to avoid the guys with "MS-13" tattooed on their forehead :dizzy:

Brianslawn
02-05-2006, 02:15 AM
Here it's more like credit cards and Salvadorans. Just need to avoid the guys with "MS-13" tattooed on their forehead :dizzy:



Salvadorans are about the best. real popular around here, too. do weekly credit card billing.

HOOLIE
02-05-2006, 02:21 AM
Salvadorans are about the best. real popular around here, too. do weekly credit card billing.

I've thought about weekly processing, but then you have the additional expense of the "per transaction" fee each time...I'm hoping with the split billing cycles that would improve the cash flow enough.

tiedeman
02-05-2006, 02:24 AM
I've thought about weekly processing, but then you have the additional expense of the "per transaction" fee each time...I'm hoping with the split billing cycles that would improve the cash flow enough.

thats right, I forgot about the 30 cent processing charge every time.

A customer once a month billing at $200 would be $5.30 in credit card fees (2.5%, and .30 cent transaction), while if I charged that customer every week on their $50, $1.55 each week which would be $6.20 for the month.

tiedeman
02-05-2006, 04:15 AM
What I have decided to do is this; send all of my current customers a letter stating the new process. And all new customers I will make sure point it out in the contract.

Brianslawn
02-05-2006, 08:51 AM
thats right, I forgot about the 30 cent processing charge every time.

A customer once a month billing at $200 would be $5.30 in credit card fees (2.5%, and .30 cent transaction), while if I charged that customer every week on their $50, $1.55 each week which would be $6.20 for the month.


yes, i am aware of the fees, my rates and fees are a bit lower cause we have more transactions. would you rather spend $5 a month and know you have your money or take your chances on billing. billing was costing me more than $5 a month per client. do cc's every other week or at beginning of month prior to service for that month.

Precision
02-05-2006, 10:17 AM
I like it, but do you feel that the 7 days is a little too much. What about 2 or 3 days?
my billing procedures are different than yours.
I get a check for the first month at sign up, then bill 2 weeks later with a due date two weeks after that.
example.
client signs the contract and starts service on April 1
I get a check for the month of April on April 1
An invoice for may goes out on April 15 with a due date of May 1
Service is suspended if payment is not recieved by May 7
A late fee is assigned on May 14

The most I will have done is provide one mow in the first week of May.

We give a courtesy call on the 7th as a reminder that service is being interrupted and that if payment in full is not recieved by the 14th, a late fee will be added.

I also get flat monthly payments. 1 mow or 5 mowes. So there is no need to worry about counting cuts, double cut charges or any of that crap.

Billing behind, puts you behind the 8ball. you are now 5-6weeks behind and if they cancel you have to take them to court to get paid for work already performed. I just don't see it. I would say I lose about 3% of my possible accounts by making them pay in advance. Half of the people are ready to give me a check before I ask for it. The rest, say, "oh, so you need a check now? Let me run in and get one."
The few that are annoyed are the ones I am most likely tohave to hunt down, so better now than when they owe me.

Precision
02-05-2006, 10:24 AM
Explain those billing cycles that you plan on using in more detail


I do that too. I bill one cycle on the 1st due on the 15th. I bill the second cycle on the 15th due on the 1st.

When I get a new account, I either give them a choice of when they want to be due. 1st or 15th. Or I tell them, since today is the 13th, how about if I put you on the billing cycle for the 15th.

Most people like the option. SSI comes in on the 3rd, so those people like to be due on the 1st. Others have the mortgage due on the 1st so they like to have me due on the 15th. It works great for me because I have two infusions of cash each month. The paperwork is a little more complicated, but since I use Quickbooks, it really only takes a couple of extra minutes for my bookkeeper to run a report on non-payment on the 7th and the 22nd. then she makes reminder calls and we usually recieve any outstanding balances within 3 days.

YardPro
02-05-2006, 11:52 AM
best way i have heard to solve this and not loose customers is:

build in a late fee to your normal pricing... 2%added to what you would normally do the job for..
then on the invoice say:

total bill $x.XX discount if paid before the 15th $x.xx

make them think they get a discount for "paying early" instead of listing it as a penalty for paying late...

remember positive reinforcement is the strongest behavior modifier

tiedeman
02-05-2006, 11:53 AM
my billing procedures are different than yours.
I get a check for the first month at sign up, then bill 2 weeks later with a due date two weeks after that.
example.
client signs the contract and starts service on April 1
I get a check for the month of April on April 1
An invoice for may goes out on April 15 with a due date of May 1
Service is suspended if payment is not recieved by May 7
A late fee is assigned on May 14

The most I will have done is provide one mow in the first week of May.

We give a courtesy call on the 7th as a reminder that service is being interrupted and that if payment in full is not recieved by the 14th, a late fee will be added.

I also get flat monthly payments. 1 mow or 5 mowes. So there is no need to worry about counting cuts, double cut charges or any of that crap.

Billing behind, puts you behind the 8ball. you are now 5-6weeks behind and if they cancel you have to take them to court to get paid for work already performed. I just don't see it. I would say I lose about 3% of my possible accounts by making them pay in advance. Half of the people are ready to give me a check before I ask for it. The rest, say, "oh, so you need a check now? Let me run in and get one."
The few that are annoyed are the ones I am most likely tohave to hunt down, so better now than when they owe me.

I like the idea of paying in advance, you then know that you never have to worry about chasing them down

tiedeman
02-05-2006, 11:55 AM
I do that too. I bill one cycle on the 1st due on the 15th. I bill the second cycle on the 15th due on the 1st.

When I get a new account, I either give them a choice of when they want to be due. 1st or 15th. Or I tell them, since today is the 13th, how about if I put you on the billing cycle for the 15th.

Most people like the option. SSI comes in on the 3rd, so those people like to be due on the 1st. Others have the mortgage due on the 1st so they like to have me due on the 15th. It works great for me because I have two infusions of cash each month. The paperwork is a little more complicated, but since I use Quickbooks, it really only takes a couple of extra minutes for my bookkeeper to run a report on non-payment on the 7th and the 22nd. then she makes reminder calls and we usually recieve any outstanding balances within 3 days.

What I always do is that I bill in the middle of the month, and the invoices are due the first week of the next month. For example, my next billing cycle goes out on the 11th, and will be due the 3rd of March.

GraZZmaZter
02-05-2006, 01:51 PM
If you inforced a "zero tolerance" policy ... i would say you should't be in business.

You need to be a people person and work with people on an individual basis. They are as unique as their own fingerprint and you need to hone in on them. The more you practice your people skills the faster and easier you will be able to read folks.

This obviously means you cant punish everyone because of a few deadbeats.

bobbygedd
02-05-2006, 02:03 PM
best way i have heard to solve this and not loose customers is:

build in a late fee to your normal pricing... 2%added to what you would normally do the job for..
then on the invoice say:

total bill $x.XX discount if paid before the 15th $x.xx

make them think they get a discount for "paying early" instead of listing it as a penalty for paying late...

remember positive reinforcement is the strongest behavior modifier
sounds like deception

Precision
02-05-2006, 03:27 PM
sounds like deception

No Bobby, that is standard practice in many industries with net 15 payments. Net 0-14 pays 98% of invoice. Net 15-30 pays 100% of invoice. Net 31-45 pays 100% plus 1.5% late fee. Net 46+ goes to collections.

Only problem with that in our industry is that without a dedicated bookkeeper that is just too much of a pain to keep track of.

So your typical $200 acct would need to be bid at $205.

So you invoice on 15th for a due date of 1st. any postmarked prior to the 1st pay $200.90. Any postmarked prior to the 14th pay $205. Any post marked after the 1st of the following month pay $208.75.

Obviously, you can adjust the net due date any way you want. My suggestion would be invoice on the 15th for a due date of the 1st.
net (-7) - 0 pays 98% of invoice. net 1-7 pays 100% of invoice. Net 8-14 pays 101.5% of invoice.

So people that pay a week or so early get a discount.
people who pay on time or within the grace period pay the invoice.
People who are late pay a late fee.

I would put it right on the statement like your mortgage does.

If paid before 30th balance due $200.90
If paid by 1st ..... balance due $205
If paid by 8th ..... balance due $208.75

Seeing it in black and white would probably get them paying earlier.

Hell, you could even do it as part of your annual rate hike.
raise rates by 4% then offer this system. So if they want they can reduce the increase by 2% or raise it by 1.5%.

I may have just talked myself into that.

YardPro
02-05-2006, 06:40 PM
precision nailed it....

and bobby.. not deception.. standard industry practice... if you had accounts set up with your vendors you would see that they do this too...
so do banks, phone and cable companies etc......

john deer gives a 2% discount if paid by the 15th (net15).
so do most of our other suppliers.. it encourages us to pay early...

it is not that complicated to set up.. it is really easy with quickbooks.. it will automatically do it for you..

we do the same thing with estimates. As a john deer prefered contractor, JD will finance the jobs for the customer. they charge a 4% transaction fee to us for the job.
in all our estimates we include this in the amount of the estimate, with terms of 90 days same as cash, x months at x % (all are the terms from john deere), or 4% discount for cash.
all

bobbygedd
02-05-2006, 06:52 PM
"make them think they are getting a discount..." anyway you look at it, it is A BIG FAT LIE. thank you

sheshovel
02-05-2006, 07:17 PM
I agree with Bibby it is deceptive to practice that type of "discount"

richard coffman
02-05-2006, 09:00 PM
i'm not for sure how all the lawn guys in your area work this out, but if a customer didn't pay for lawn maintenance for 7 or 8 weeks, i'd give the customer a call and find out what's been causing them not to pay you. a lot of times you'll get excusses and they will send a check out to you the next day. if they don't want to answer your calls or reply to your messages, cut off there lawn maintenance, go the legal way. deadbeats are deadbeats and good customers will allways try to pay even if a few weeks late.

respectfully,
richard coffman
ownerpayup

Brianslawn
02-05-2006, 09:34 PM
If you inforced a "zero tolerance" policy ... i would say you should't be in business.

You need to be a people person and work with people on an individual basis. They are as unique as their own fingerprint and you need to hone in on them. The more you practice your people skills the faster and easier you will be able to read folks.

.


best buy wont let me take home a plasma screen for $5 down and just make payments whenever i feel like it. maybe they shouldnt be in business either.

tiedeman
02-05-2006, 11:12 PM
"make them think they are getting a discount..." anyway you look at it, it is A BIG FAT LIE. thank you

I totally agree about that, it is deceptive

Like I stated earlier, I am just going to be a hard@ss with people paying on time. If I lose customers over it, that is fine by me. I would say that around 12% of the customers usually pay late. So if I lose that 12%, fine. I would rather have less customers, but those that pay 100% on time, compared to more customers, where only 85% pay on time.

I can understand some people paying late, such as a library that I used to maintain had to wait until the next months board meeting to approve the payment of the bills, which I can understand.

DUSTYCEDAR
02-05-2006, 11:53 PM
You charge them a late fee, but when they pay the bill they leave the late fee off of the payment. They feel that they should not have to pay it. So what happens when they don't pay the late fee? What do you do then?
that is the ?
like has been said most pay on time some try my good will and some get the boot
late payers suck and they get the boot

tiedeman
02-06-2006, 12:11 AM
You charge them a late fee, but when they pay the bill they leave the late fee off of the payment. They feel that they should not have to pay it. So what happens when they don't pay the late fee? What do you do then?
that is the ?
like has been said most pay on time some try my good will and some get the boot
late payers suck and they get the boot

I am just going to stick to my guns:gunsfirin

Precision
02-06-2006, 12:19 AM
I agree with Bibby it is deceptive to practice that type of "discount"
It is only deceptive if you try to make it so.

If you spell it out, especially like on my suggestion. There is no deception. It is stick and carrot as opposed to big stick. Nothing more, nothing less.

wriken
02-06-2006, 08:58 AM
If I have a real stubborn late payer, I usually win in the end, higher then normal clean-ups, add alittle on my hourly work for them etc. More then likely I get my money from them. I don't over do it to the point that they will switch to another LCO, then I would have to play the court scene. I may add 20.00 more to a clean-up, 5.00 more per hour or so.All in all I have taken 6-7 clients to court, have'nt lost yet. Knock on Wood. I have close to 150 clients now they all seem to pay pretty fast now, I think word gets around.:)